Introduction

One of the four primary duties which California attorneys owe to all clients is a duty of confidentiality. The other three primary duties are the duty of undivided loyalty,[1] the duty to disclosure,[2] and the duty of competent representation.[3] The duty of confidentiality prohibits a lawyer from voluntarily disclosing any information obtained by the lawyer as a result of a lawyer-client relationship if doing so likely would be harmful or embarrassing to the client, or if the client has directed the lawyer to not disclose the information.[4]

Statutory Source of the Duty of Confidentiality

“It is the duty of an attorney to do all of the following: . . . To maintain inviolate the confidence, and at every peril to himself or herself to preserve the secrets, of his or her client.”[5]

“‘[C]onfidential communication between client and lawyer’ means information transmitted between a client and his or her lawyer in the course of that relationship and in confidence by a means which, so far as the client is aware, discloses the information to no third persons other than those who are present to further the interest of the client in the consultation or those to whom disclosure is reasonably necessary for the transmission of the information or the accomplishment of the purpose for which the lawyer is consulted, and includes a legal opinion formed and the advice given by the lawyer in the course of that relationship.”[6] “A disclosure in confidence of a communication that is protected by a lawyer-client privilege when disclosure is reasonably necessary for the accomplishment of the purpose for which the lawyer was consulted, is not a waiver of the privilege.”[7] “[T]he client, whether or not a party, has a privilege to refuse to disclose, and to prevent another from disclosing, a confidential communication between client and lawyer if the privilege is claimed by: (a) The holder of the privilege; (b) A person who is authorized to claim the privilege by the holder of the privilege; or (c) The person who was the lawyer at the time of the confidential communication, but such person may not claim the privilege if there is no holder of the privilege in existence or if he is otherwise instructed by a person authorized to permit disclosure.”[8]

Common Law Duty of Confidentiality

“One of the principal obligations which bind an attorney is that of fidelity, the maintaining inviolate the confidence reposed in him by those who employ him, and at every peril to himself to preserve the secrets of his client. This obligation is a very high and stringent one. It is also an attorney’s duty to protect his client in every possible way, and it is a violation of that duty for him to assume a position adverse or antagonistic to his client without the latter’s free and intelligent consent given after full knowledge of all the facts and circumstances. By virtue of this rule an attorney is precluded from assuming any relation which would prevent him from devoting his entire energies to his client’s interests. Nor does it matter that the intention and motives of the attorney are honest. The rule is designed not alone to prevent the dishonest practitioner from fraudulent conduct, but as well to preclude the honest practitioner from putting himself in a position where he may be required to choose between conflicting duties, or be led to an attempt to reconcile conflicting interests, rather than to enforce to their full extent the rights of the interest which he should alone represent.”[9]

“[T]he purpose and necessities of the relation between a client and his attorney require, in many cases, on the part of the client, the fullest and freest disclosure to the attorney of the client’s objects, motives, and actions. Thus the protection of confidences and secrets is not a rule of mere professional conduct, but instead involves public policies of paramount importance which are reflected in numerous statutes.[10]

The existence of the so-called tripartite relationship[11] among a liability insurer, its policyholder, and their common defense lawyer does not excuse dependent counsel from the obligation to withhold from an insurer confidential information received from a policyholder, including sensitive information that could impact coverage. The burden of identifying such privileged coverage information must be borne by the lawyer, not the lay client. “Each of these lawyer-client relationships [with the policyholder and the insurer] is endowed with confidentiality. . . . [T]here may be confidences indulged by the insured to the attorney which in turn are not intended for the insurer.”[12]

“[W]here the carrier questions the availability of coverage and provides a defense in the third party action subject to a reservation of rights, a conflict exists – because the insured’s goal is coverage, which flies in the face of the insurer’s desire to avoid its duty to indemnify. Since it is unavoidable that, in the course of investigating and preparing the insured’s defense in the third party action, the insured’s attorney will come upon information relevant to a coverage issue, it is impossible for the carrier’s attorney to represent the insured (unless, of course, the insured consents).”[13]

Joint Client Exception Does Not Require Disclosure of Confidential Information

Similarly, the joint client exception does not require the policyholder or dependent counsel to disclose confidential information to the insurer. “Where two or more clients have retained or consulted a lawyer upon a matter of common interest, none of them, nor the successor in interest of any of them, may claim a privilege under this article as to a communication made in the course of that relationship when such communication is offered in a civil proceeding between one of such clients (or his successor in interest) and another of such clients (or his successor in interest).”[14] “Assuming the attorneys representing [the policyholder] in one or more of the underlying actions were selected by the carriers, those attorneys were not ‘retained or consulted’ by the carriers within the meaning of Evidence Code section 962. To the contrary, the attorneys were retained to represent [the policyholder] and only [the policyholder]. [W]hen a carrier is called upon to defend its insured, the attorney retained by the carrier for this purpose owes the same fiduciary duty to the insured as would have been owed had the insured made the selection of counsel and the attorney’s primary duty is to further the best interests of the insured.”[15]

Neither the policyholder nor dependent counsel may be required to disclose confidential information to the insurer, including information potentially impacting coverage. “The [insurer] is not entitled under a cooperation clause to learn of any and all legal advice obtained by [an insured] with a ‘reasonable expectation of confidentiality.’”[16]

Ethical Exception to Prevent a Crime

“A [lawyer]’s duty to preserve the confidentiality of client information involves public policies of paramount importance. Preserving the confidentiality of client information contributes to the trust that is the hallmark of the client-lawyer relationship. The client is thereby encouraged to seek legal assistance and to communicate fully and frankly with the lawyer even as to embarrassing or legally damaging subject matter. The lawyer needs this information to represent the client effectively. . . . Almost without exception, clients come to lawyers in order to determine their rights and what is, in the complex of laws and regulations, deemed to be legal and correct. . . . Paragraph (A) [of Rule 3-100] thus recognizes a fundamental principle in the client-lawyer relationship, that, in the absence of the client’s informed consent, a member must not reveal information relating to the representation.”[17]

Proposed Rule 1.6 Confidential Information of a Client

The California Rules of Professional Conduct are in the process of being revised. Proposed Rule 1.6 provides: “(a) A lawyer shall not reveal information protected from disclosure by Business and Professions Code § 6068(e)(1) [“It is the duty of an attorney to do all of the following: (e) (1) To maintain inviolate the confidence, and at every peril to himself or herself to preserve the secrets, of his or her client”] unless the client gives informed consent, or the disclosure is permitted . . . to prevent a criminal act. Comment . . . A lawyer’s duty to preserve the confidentiality of client information involves public policies of paramount importance. (In Re Jordan (1974) 12 Cal.3d 575, 580].) Preserving the confidentiality of client information contributes to the trust that is the hallmark of the lawyer-client relationship. The client is thereby encouraged to seek legal assistance and to communicate fully and frankly with the lawyer even as to embarrassing or detrimental subjects. The lawyer needs this information to represent the client effectively and, if necessary, to advise the client to refrain from wrongful conduct. Almost without exception, clients come to lawyers in order to determine their rights and what is, in the complex of laws and regulations, deemed to be legal and correct. Based upon experience, lawyers know that almost all clients follow the advice given, and the law is upheld. Paragraph (a) thus recognizes a fundamental principle in the lawyer-client relationship, that, in the absence of the client’s informed consent, a lawyer must not reveal information protected by Business and Professions Code § 6068(e)(1). (See, e.g., Commercial Standard Title Co. v. Superior Court (1979) 92 Cal.App.3d 934, 945.)

“Lawyer-client confidentiality encompasses the lawyer-client privilege, the work-product doctrine and ethical standards of confidentiality. [2] The principle of lawyer-client confidentiality applies to information a lawyer acquires by virtue of the representation, whatever its source, and encompasses matters communicated in confidence by the client, and therefore protected by the lawyer-client privilege, matters protected by the work product doctrine, and matters protected under ethical standards of confidentiality, all as established in law, rule and policy. (See In the Matter of Johnson (Rev. Dept. 2000) 4 Cal. State Bar Ct. Rptr. 179; Goldstein v. Lees (1975) 46 Cal.App.3d 614, 621.) The lawyer-client privilege and work-product doctrine apply in judicial and other proceedings in which a lawyer may be called as a witness or be otherwise compelled to produce evidence concerning a client. A lawyer’s ethical duty of confidentiality is not so limited in its scope of protection for the lawyer-client relationship of trust and prevents a lawyer from revealing the client’s information even when not subjected to such compulsion. Thus, a lawyer may not reveal such information except with the informed consent of the client or as authorized or required by the State Bar Act, these rules, or other law.

“Narrow exception to duty of confidentiality under this rule. [3] Notwithstanding the important public policies promoted by lawyers adhering to the core duty of confidentiality, the overriding value of life permits disclosures . . . even without client consent. . . . the policy favoring the preservation of human life . . . permits disclosure to prevent a future or ongoing criminal act.”

Practice Pointer:

Some dependent counsel assert that they may avoid disqualifying conflicts of interest by remaining ignorant of an insurer’s reservation of rights or ignoring coverage issues. A problem with this approach is that so long as dependent counsel is ill-informed regarding the bases upon which the insurer has declared that it may deny coverage to the policyholder, the lawyer may inadvertently disclose to the insurer confidential information that adversely impacts the interests of the policyholder and jeopardizes coverage, especially since the insurer may reserve rights at any time.[18] Such a disclosure by dependent counsel may be a violation of the duty of confidentiality. Moreover, such a disclosure may support a claim that the insurer is estopped from raising a new ground to deny coverage because the policyholder detrimentally relied upon dependent counsel faithfully discharging the duty to confidentiality in accepting potentially conflicted representation. The lawyer’s violation of the duty to confidentiality may be a basis for discipline or civil liability.

[17] Rule 3-100, discussion (citations omitted.) Rule 3-100: “(A) A member shall not reveal information protected from disclosure by Business and Professions Code section 6068, subdivision (e)(1) without the informed consent of the client, or as provided in paragraph (B) of this rule. (B) A member may, but is not required to, reveal confidential information relating to the representation of a client to the extent that the member reasonably believes the disclosure is necessary to prevent a criminal act that the member reasonably believes is likely to result in death of, or substantial bodily harm to, an individual. (C) Before revealing confidential information to prevent a criminal act as provided in paragraph (B), a member shall, if reasonable under the circumstances: (1) make a good faith effort to persuade the client: (i) not to commit or to continue the criminal act or (ii) to pursue a course of conduct that will prevent the threatened death or substantial bodily harm; or do both (i) and (ii); and (2) inform the client, at an appropriate time, of the member’s ability or decision to reveal information as provided in paragraph (B). (D) In revealing confidential information as provided in paragraph (B), the member’s disclosure must be no more than is necessary to prevent the criminal act, given the information known to the member at the time of the disclosure. (E) A member who does not reveal information permitted by paragraph (B) does not violate this rule.”